Forget about buying that big house or fancy car. In Singapore, you’ve reached the pinnacle of financial success when you have enough to retire on without having to rely on your kids for handouts.
But retiring comfortably before death comes knocking on your door isn’t just about working hard while you’re young, and thinking you’ll be justly rewarded when you’re old enough to stop. As there is no real pension system in Singapore and many people drain their CPF savings in order to buy property, proper planning, saving and investing are essential.
Here are three huge retirement mistakes that could condemn you to many more years of work.
Thinking you have lots of time to start planning for retirement
You haven’t even spotted your first white hair yet, so why worry about retirement? Unfortunately, no matter how young you are, so long as you’ve entered the workforce, you’re no longer entitled to think it’s too early to start planning for retirement.
The thing about investing for retirement is that the earlier you start, the less you actually need to cough up, because compounding interest will allow your money to grow over time.
On the other hand, if you start desperately trying to amass a retirement nest egg at the age of 50, you’d better be able to cough up hundreds of thousands of dollars, or even over a million depending on how much you spend each month.
It is clear that many Singaporeans think they have all the time in the world to start planning for retirement, based on the fact that 1/3 of working adults aren’t planning for retirement, and of those who are, 6 out of 10 people start saving for retirement only at age 45. Starting late is the main reason people can’t retire comfortably—not earning too little.
Not factoring in the possibility of living in a nursing home or hiring a live-in caregiver
In Singapore, sending a family member off to a nursing home is still taboo. As a result, many people think they’ll never end up in one of those places themselves.
But it’s a good idea to factor in the possibility of needing a live-in caregiver or living in a nursing home when figuring out how much money you need to retire on.
Singaporeans are living longer than ever, and having fewer kids than before. That means it’s going to be less and less realistic to expect your kids to look after you when you’re older. Even if you do have a kid or two, there’s no guarantee they won’t be working abroad or simply unable to afford to support you.
Overestimating how long you can work
If you’re one of those lucky folks who love their job so much they declare smugly that they “never want to retire”, good for you, but don’t assume you’ll never need retirement savings like the rest of us.
As many of the middle aged folks who’ve been retrenched in 2016 would know, your career could well end prematurely. Many of those formerly highly-paid PMETs never manage to completely replace their lost incomes. Some end up driving taxis.
There’s no guarantee for you or for any of us that we’ll stay healthy enough to work at our current pace forever. Singaporeans are living longer, but they’re also the world’s second most diabetic population, and kidney failure rates are on the rise. We also have one of Asia’s highest colorectal cancer incidences.
When in doubt, it’s always better to plan to retire earlier rather than later. Just because you think you’d love to still be working at the age of 75 doesn’t mean your body will let you, or that employers will still want you in their offices.
What other retirement mistakes are Singaporeans prone to making? Tell us in the comments!
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